So many people think a couple of calls, a quick look on the Internet and a word or two from their brother-in-law and they have figured out who has the great rates. Sorry, it isn't going to happen that way. First of all I have been in the mortgage business over 1.5 decades and I haven't the slightest idea who has the best rates, today, yesterday or even tomorrow. But the major problem with that statement is it is irrelevant because you could care less who has the best rates you only want to know who has the best rate for you and your particular loan. Therein lies the real problem.
What is your loan? And how can you find out who has the best rate for it, without really knowing what "it" is? There are too many factors making up "it" of which the typical borrower hasn't any knowledge. So lets begin this dissertation with the factors that help make up your loan. There is the size of the loan which has it falling into one of three categories: conforming (up to $417,000 for a single family residence and higher for a duplex, triplex or four-plex), jumbo over the $417,000 and super jumbo which can begin at $750,000 or $1,000,000 or $1,250,000 or even as high as $1,500,000 with some lenders. That really makes it tough to categories the bigger loans.
Next there is the loan to value: the amount of the loan divided by the value of the house.
If you guess or use a service such as Zillow you could be shopping for the wrong loan.
Some lenders give credits if your loan to value is 60% or 65% or even 70% while others will charge you if your loan to value is 80% or over.
Credit score: Not the one you can pull yourself but a lenders credit which is usually lower. If you 're too low (under 540) you won't get a sub prime loan these days, or if you are high enough, over 720, you might get some credits.
Qualifying is very important. Can you use income documentation or do you need to be a stated income borrower? Do you have to be no documentation because of employment problems and in any of the above can you show the needed liquid assets for reserves?
How about the type of property, single family or units; primary, second home or rental?
All of these get different charges or credits when figuring the pricing of the loan.
Now you hear a loan advertised and what do you do? Do you assume they are talking about you with all of the above figured in? When you start your calling around do you state all of the qualifications and ramifications of the various categories, or do you just look at the big picture and figure it will work out? And as I said above what if your assumptions are wrong and you are quoted a rate and cost that can't be delivered because of your erroneous assumptions?
Roger Schlesinger's Mortgage Minute is heard on hundreds of radio stations and daily on the Hugh Hewitt radio show and Michael Medved shows. Roger interacts with his hosts and explores the complicated financial markets in order to enlighten his listeners and direct them along their own unique road to financial freedom.
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